5 Reasons Why Personal Loan Companies are
Better Than Banks
By Julia Beyers
If you look for a personal loan without collateral in the Philippines, don’t be too quick to contact the bank. Take your time to explore the entire market. The country features several types of lending organizations, each with different requirements and rates. Depending on your purpose, you may be interested in short-term payday loans or long-term big loans that deliver up to 1 million peso for 20 years.
In this guide, we want to focus on independent private lending firms that work with both individuals and businesses. Unlike governmental bodies like SSS and large banks, these companies offer more favorable lending conditions. Moreover, they outnumber their state-owned opponents, so you will be able to find the best lender for you.
Without further ado, let’s look at the benefits of using private lenders.
Lending Companies in the Philippines
In a nutshell, there are only three types of lenders. The first one includes different financial organizations like GSIS or SSS, and banks that are controlled by the government. The second type is private firms, e.g. Cash Mart and Robocash. And finally, there are unique peer-to-peer lending networks like Kiva and FundKo, where borrowers get money from individuals, while the company behind this network only facilitates their interaction.
All non-governmental lending businesses are regulated by the official bill known as Act No. 9474. You can also check the policies for implementation of its rules. According to Filipino laws, all lenders must meet several requirements:
- Total capitalization: at least 1 million peso;
- Form of entity: a stock corporation only;
- Proofs: SEC-issued Certificates of Authority are obligatory;
- Stockholders: the majority of stocks must be owned by Filipino citizens.
Please, be sure to double-check the chosen lender’s reliability by analyzing its site, offerings, and rules. Use the list above to ensure that a given company operates legally. A lot of small private companies are fraudulent by nature as they want to get your sensitive data such as bank credentials. Make sure that you cooperate with a trusted partner before applying for a loan.
Advantages of Private Lenders
Getting a loan may be a pretty complicated and time-consuming process. Often, banks set strict requirements such as a perfect credit score or several proofs of a stable income. Such conditions may be impossible to meet, when you need money urgently to cover some unexpected losses or make an essential business investment. In this case, both private and state-owned banks aren’t the best option despite the fact that they have a few advantages, as well.
But now we’re going to talk about private or so-called personal lending companies. When compared to banks, they come with five clear benefits.
- Fewer Restrictions
As a rule, private lenders require fewer documents and tend to approve applications more often. Let’s say, a regular bank asks not only for one or two valid IDs, but for employment proofs and, sometimes, collateral, while non-governmental lenders issue loans for almost any citizen that has an ID only. Large lenders may also require proofs of income. Still, smaller private companies lend money even to unemployed individuals, students, and housewives.
- No Credit Score Check
One of the most important requirements in banks is a good or perfect credit score. To be able to get the best rates and the biggest loan amounts, a citizen must provide its flawless credit history with a score up to 850! But private lenders don’t pay too much attention to this feature. Instead, they focus more on income documents proving that you can repay the loan in time. Thus, even applicants with scores near 300 or without a credit history at all can get personal loans.
- More Flexible Options
Expanding on the two previous ideas, we should mention another benefit. Independent firms often deliver more diverse loan terms and amounts. For example, you can submit a request for 1,000 peso for 7 days if you need the smallest possible payday loan. On the other side, private lenders also offer huge packages up to 1 million peso for several years, because borrowers often want to get housing or business loans. Banks are less flexible though.
- Quick Approval
This point is critical for a lot of customers, as we know. Traditional lenders spend weeks and even months on checking all the documents to deliver money to you. That’s unacceptable! When a client needs a loan urgently, they’d better opt for private online lenders that accept requests within 24 hours. Of course, some companies may process your application for 2-3 working days, but it’s still much faster than weeks in banks.
- Wider Choice
Last but not least, there are more private companies and P2P lending networks in the Philippines, than banks and governmental bodies. Hence, it will be easier for a borrower to find an appropriate lender. Just look at the list of organizations with official Certificates of Authority as of April, 2018. There are 2,582 names! Some of them aren’t private companies as you can see the SSS abbreviations, others are famous banks, but the majority of the titles refer to personal loan companies.
Stick to Your Purpose
After unveiling the advantages of private lenders, you should be ready to choose the most suitable loan type. For this, remember one essential rule: it always depends on your purpose. Ask yourself why exactly you need the money and how you will spend it. Will it be a business investment? Some daily expenses? Maybe, a big purchase? Without a clear understanding of goals, you risk wasting the borrowed money and getting into debt.
Be sure to choose the lending company carefully. Remember to check its reliability by analyzing rules and certificates. And always stick to your plan of expenses and repayments!
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